Informed.IQ’s Post

Being 100% compliant with GAP coverage guidelines doesn't have to be painful. Over the past few years vehicle prices and interest rate hikes have led to higher financing costs. Consumers are stretching out their loan terms to maintain lower monthly rates. Higher costs and longer loan terms are two of the reasons people turn to GAP coverage. GAP coverage is more important to lenders as a result of this increased interest. If you are struggling to stay compliant or just want to be more efficient, there is a better way to handle this process. Send me a message and I would be more than happy to help to continue this conversation. Let's make 2024 a better year for you and your business.

Automation and #AI can help provide the data lenders need to support standardized GAP refunds that are also compliant federally and by state and can do so in a way that will reduce costs not increase them. Reach out to Informed.IQ if you are doing #autolending and want to know how this can be done.

Some sensible points raised in this article, well worth a read.

🚗💸 Navigating Car Finance Complaints: Insights from Martin Lewis In light of the ongoing investigation by the FCA into discretionary commission arrangements in the car finance industry, Martin Lewis has been using his various platforms shed light on crucial details impacting consumers: 🔍 Summary of Martin's points: Issue: Some car finance customers may have been overcharged on their loans due to discretionary commission arrangements offered by lenders. Background: Before January 2021, brokers could adjust interest rates for higher commissions, leading to customer complaints post-ban in 2021. Current Status: Providers are rejecting most complaints, prompting FCA's assessment to ensure fair compensation for affected consumers. 📈 Impact: Complaint Letters: Over 1.1 million potential complaint letters have been submitted through Martin Lewis' free tool since early February (around 30,000 a day!), highlighting consumer concerns. Estimated Claims: Martin Lewis estimates the average claim could be worth around £1100. Lenders are facing provisions for potential compensation, reflecting the financial impact of these disputed commission practices with Lloyds reportedly setting aside around £450m to deal with the issue. 🛠️ Actions: Pausing Complaints Process: FCA has paused the 8-week response deadline for providers, ensuring fair and orderly handling of complaints. Extended Referral Time: Consumers now have an extended timeframe to refer complaints to the Financial Ombudsman Service for thorough investigation. Key Takeaways: If you had a PCP or HP agreement prior to Jan 2021 make your enquiries, and complaints where appropriate, now! Consumers are urged to utilise available channels for complaints and seek guidance or support if needed. #carfinance #carfinanceclaims #fca #consumerduty #consumerfinance #martinlewis #claimsmanagement #financialservices

Julian, Very many thanks for the article in your AFP website always insightful and thought provoking as revealed in the comments and different perspectives that you have elicited from your article. Automotive Finance has a proud history and the provision of finance has been successful for ‘All Parties’ – Manufacturers, Dealers, Customers, Banks, Direct Lenders and Brokers and most importantly the Consumer probably 95% of the time. Over the years the developments in Retail Motor Finance have generally been very positive with the expansion of product offerings (PCP, PCH, Salary Sacrifice) supported by integrated technologies and online platforms that enable the consumer to search for a vehicle and finance transaction that matches their personal circumstances including affordability and often linked to their personal credit rating. A key benefit of course is that the availability of finance has enabled the consumer to acquire a vehicle that otherwise may not have been affordable to them. The accessibility of finance has also been particularly beneficial for OEM’s and in parallel car dealers and brokers. Allowing Claims Companies and others to demonize the Retail Motor Finance Industry is not something that the Trade Associations and others should allow. Stand up and explain the benefits of your Financial Services products to the consumer and the economy. A review by the Competition and Markets Authority as you suggest would provide a far more effective analysis of the market confirming the high levels of competition that exist, that pricing is linked to risk / return for the lender and in the large majority of cases the consumer has benefitted from Retail Motor Finance activities.

And a postscript: Allowing Claims Companies and others to demonize the Retail Motor Finance Industry is not something that the Trade Associations and others should allow. Stand up and explain the benefits of your Financial Services products to the consumer and the economy. A review by the Competition and Markets Authority as you suggest would provide a far more effective analysis of the market confirming the high levels of competition that exist, that pricing is linked to risk / return for the lender and in the large majority of cases the consumer has benefitted from Retail Motor Finance activities.

FOS anticipates a surge in car finance claims this year, despite the FCA's historical practices review. Abby Thomas, FOS Chief Executive, highlights concerns about lending affordability and disputes over car loan agreements. As we navigate this landscape, it's crucial for industry stakeholders to address consumer grievances promptly. FOS aims for a 90% resolution within six months and reduced costs to ease the burden on businesses. Here's to prioritising consumer protection and transparency. Together, we can ensure fair outcomes for all. #ConsumerProtection #AutoFinance 🚗 Asset Finance Connect - https://bit.ly/43OYExJ

In a speech this month, Nikhil Rathi played down speculation that redress for car finance commission issues would be ‘the next PPI’, despite it being “improbable we will find nothing to report as we look at historic motor finance sales”. Whatever detailed findings bring later this year, Matt Browne and Julian Seeranj lay out why there's a lot to be done to prepare operations for redress programs and making sure compliance with ongoing regulation in the sector is where it needs to be. #carfinance #financialcompliance #regulation #bovill

A million motorists claim they were mis-sold car finance in 'PPI-scale' scandal with 30,000 daily complaints being submitted amid potential 'widespread misconduct' according to this story in today's Telegraph. 85% of car sales are on some sort of finance agreement so this could be gargantuan and with the recent Lloyds TSB FOS decision, everyone is going to pile in (with an estimated £10 billion having to be made in refunds). This is where car dealers were adding a fatter slice (the so called "discretionary payment") to make themselves even more money (i.e. ripping off the customer). When it comes to insurance premium finance, I don't know what the figures are but clearly more people making use of it now as the cost of living crisis shows very little sign in going in reverse. Once again, insurance brokers simply must justify any increases in their 'cut' over and above what the lender is already paying them, otherwise look what could happen!! Who's to blame - are lenders also complicit in adding this extra bunce to the loan agreement without putting a stop to it? Many of us will have seen some right rip-offs out there and am sorry that the actions (greed) of the few tarnish everyone else. https://lnkd.in/etVDFmK5

There's been a lot of news about the current Financial Conduct Authority investigation into discretionary commission agreements in the car finance world, and most of the news media don't seem to understand the issue. Most reporting tends to fall into one of two camps – evil banks or stupid customers – and neither is really correct. Here's our explanation on what's happening and what consumers can expect over the next few months. #carfinance #FCA #expertadvice